How Saving Money Cost Me Money

For the next week (or two), we’ll be sharing “audition” pieces from folks interested in being new staff writers at Get Rich Slowly. Your job is to let us know what you think of each of these writers. Pay attention, give feedback, and after a couple of weeks we’ll ask which writers you prefer. This article is from Kristin Wong, who also writes at The Heart Beat blog for MSN Living.

I used to have a savings problem. But not in the way that one might think.

For years, when payday would come, I would budget a ridiculously large percentage of my paycheck for savings. I left myself very little for bills and practically nothing for shopping, eating, entertainment — the things I vaguely dubbed “nonessentials.” I was determined not to live beyond this budget.

Well, I sorely underestimated my love of “nonessentials.” And it cost me, because I would inevitably overspend, even as little as $10. Which doesn’t sound so bad, except that, after saving all of my money, I had nothing left in my checking account and would thus incur overdraft fees. At one point, a $2 purchase spiraled into $300 dollars of overdraft fees.

My reasoning was this. My savings account was with a different bank that offered a higher interest rate. Yes, it occurred to me that the $2 in interest was ruled out by my $35 overdraft fee. But I kept convincing myself that the fee was only that month. I wouldn’t let it happen again. But of course, it did happen again. And again. It wasn’t just overdraft fees. There were other financial decisions I made — in the spirit of saving money — that ultimately cost me.

I was so obsessed with saving, I was making unreasonable goals and ultimately setting myself up for failure. I desperately wanted to see all of my money in one place. Having $1,500 in checking and $5,000 in savings wasn’t enough. I wanted the instant gratification of seeing $6,5000. I would leave myself nothing just so I could see that number. Like I said, it was an obsession. I admit: I also wanted to get rich slowly as quickly as possible.

Here’s the history of my savings problem. I love to shop. Always have. While I’ve learned to curb it, it’s a struggle. My solution was to replace shopping with another activity that gave me a sense of self-worth. That activity was saving money. I figured using the antidote would solve the problem, but I was merely putting a band-aid on it. I had to learn the first tenet of the Get Rich Slowly philosophy: Money is more about mind than it is about math.

Recently, I talked to my mom about this. She mentioned that my father had been on a money-saving kick, putting nearly everything into his savings, much like I’d been doing. My father had become increasingly depressed, and having never suffered from depression, he had no idea why. Eventually, it came to him. He had zero in his checking account, intentionally. He was scrambling to outrun overdraft fees and also make sure he had just enough to pay the bills. Maintaining a zero balance is not just stressful, it’s bleak. My mom, in her infinite simplistic wisdom, asked: If your money is costing you peace of mind, why are you saving it?

Simply put, saving money is great. But like any obsession, it can sometimes end up costing you. Here are a few specific lessons I learned from my money-saving sprees.

Cell phone bill : When I was in college and signed up for my first cell phone plan, I had the cheapest, most utilitarian plan possible. Something like 100 minutes a month for $19.99. Yes, it did occur to me that I talked on the phone probably in excess of 1,000 minutes a month. No problem, I thought. I’ll use it for emergencies only. Ha. Needless to say, over the months, I ended up paying more in over-usage fees than if I had just upgraded my plan.

New checking accounts: On the advice of a friend, I once got sucked into a “new checking account” offer that had an awesome points program for travel. I signed up and could already see myself sipping a 2 oz. bottle of wine at 40,000 feet. But the switch threw off all of my auto-pay bills, making it a huge headache, and the points program ended before I even had a chance to redeem any of them, making it a complete waste of time. Add that to the fact that this particular bank had the worst customer service I’ve ever experienced, and it cost me not just money but hours on the phone. There are reasons for switching checking accounts. A possible free flight isn’t one of them.

Bank fees: When I went back to my old bank, they did something that was very unlike them. They started charging me a monthly maintenance fee! They told me there was nothing they could do about it, unless I kept $1,500 in my account each month. It’s like they were holding my checking account for ransom! But I did have $1,500?in my beloved savings. I hate taking money out of my savings, but it only made logical, financial sense to do it. There was no point in having a separate savings if I was spending $12 each month and only making $2 in interest. A no-brainier for most, but for compulsive savers, it’s a very conscious decision, and seeing your savings account less $1,500 hurts a little.

I’m not suggesting living beyond your means or giving in to overindulgence. But it’s also important not to go to the other extreme and save beyond your means. The lesson I learned: it’s nice to have the instant gratification of seeing a big number in your savings account, but slow and steady always wins the race.

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Great post! It reminds me of the section in the Elizabeth Warren book about the subset of people who aren’t allowing themselves 20% for wants and who are miserable. Having that freedom helps with actually doing the saving.

And it’s great to be looking at things beyond mental accounts. Right now I’m losing a little money because our checking account for some ridiculous reason has a higher interest rate than our savings account at the same bank, but I have our summer money (we don’t get paid until October) in savings rather than checking because that’s how I know if we’re on track for spending for the month. Right now I’m willing to pay extra for that benefit, but maybe I shouldn’t be. (Or maybe I should put all our designated spending money in checking and keep the emergency money in saving. Maybe I’ll do that with the July 1 bills.)

I know. It kills me that the best interest rates right now are with checking accounts. But those rates only come with using the debit card a certain number of times, which is not how I want a savings account to work.

So right now we keep the amount needed in checking to maximize interest (they only give it on a certain amount…currently $10k but about to drop to $5k, so we’re thinking of switching banks that has a lower interest rate but gives it on up to $25k), and the rest in savings. But it’s a constant mental struggle, because I think of checking as the money that’s there to be spent (+ a cushion), while the money in savings is meant to stay put. Having to force a larger mental cushion is hard, but I do love the interest rate!

Are you me?! I also don’t get paid until October, and keep the summer savings in a lower interest account so I can ration out my monthly spending better. I move the designated amount per month into checking at the beginning of each month.

Your case reminds me of those obese people who want to get slim as soon as impossible and then put on an impossible diet plan. This diet program squeezes them so much that the only thing they think of is food. The moment the diet plan is over they devour as much food as possible and then they don’t understand why the diet plan is not working. However, in your case you have understood. Congratulations.

I used to have this issue where I could either keep to my diet or keep to my budget, because I always went to extremes with both of them, so I’d end up blowing one or the other. When I finally found some balance, and gave myself some freedom, all of a sudden they both were doable.

I completely agree. It’s easier for me to save and be frugal if I have something coming up I get to spend money on (a vacation). It’s easier for me to say no to unhealthy food knowing I have a special occasion in the near future to “cheat” with. This also applies with “mental health days” from work. If I have a massage appointment coming up, but I wake up having a bad day, I just have to remember that I have some time off coming up soon and don’t end up wasting a sick day for no good reason. In all cases, I have something to look forward to. It’s not all or nothing, I get “breaks”! (I guess I look at it like, one step backward, several leaps forward).

With me for food, I found the trick was to allow myself a small amount of something really really good. I stopped craving bad candy once I started allowing myself smaller amounts of really high quality candy. The high quality stuff is just more satisfying.

(This of course does not work with cheetos, but for that my rule was, “I will eat cheetos of opportunity if they come my way, but I will not purchase cheetos.” It also helped me not eat bad potato chips when they came catered because I’d compare them to cheetos, which were the thing I would make the exception for if they were offered.)

There have actually been scientific studies that show that people can only apply willpower to a limited number of areas at once. (I think JD actually linked to that in a post here.) If you try to diet AND save AND stop smoking, you’ll crash and burn. Take it slow.

I sock money away every month into an ING “travel” account, but then when I spend on travel, I use my checking account and scrimp to cover it. For some reason I can’t bring myself to withdraw the money. My husband and I actually decided today to put that money into an investment fund instead.

This was the most interesting post I’ve read in awhile! Saving beyond your means. I hadn’t ever put a word on it before, but htat happened to my wife and me awhile back. We so desperatly wanted to get out of debt and save money that we started saving too much. Like you said, it’s possible! And it creates a lot of stress. We had to loosen our saving a little and boy did that make us a million times less miserable!

Definitely a tendency I have. Not to the point that its cost me money, but I can see the slippery slope. All those traditional ‘great money saving tips’ can bite you right in the @$$ if you don’t have your house in order.

This article was a lot different than what I expected based on the title.

I have a related problem. I was fine depriving myself to get debt paid off (because it was only for a year). Now, I have a hard time negatively judging others that won’t deprive themselves.

For example, yesterday I told DH I wanted a pedicure but I’m not going to get one because I can’t justify “wasting” the money on something I could really do for myself and it would put us overbudget for the month and I don’t think this is a good enough reason to take money out of savings.

Today someone walked in w/a pedicure and was talking about eating lunch out with her DH later today and all I could think was **you’re in debt, why don’t you pay that off first?!**

Seriously! In reading this it took a minute for it to dawn on me that the author only considered money “saved” once it was in the specific account for savings!

I used to shuffle money back and forth to ING back when interest rates were high – I would keep a few hundred in my checking but move the rest to ING as long as I didn’t need it for a few weeks – then I’d bring it back prior to paying a bill. This was both stressful and stupid. I realized how stupid it was the day that I accidentally scheduled a transfer back to checking…but put the amount in negative! So it ended up both overdrawing my checking account AND causing the bill payment to bounce. These days I don’t use a savings account at all – all of our cash savings are spread between 3 checking accounts. It’s not spent, so I call it “savings.”

I had an experience on a checking account I use very little. The bank changed terms and was going to start charging $4 per month if you did not maintain a $1000 balance or have a direct deposit. I took $1000 out of my savings earning less than 0.1% and moved it to the checking account. It is similar to my earning 4.8% on the $1000.
A great post! You have to look at all factors to make smart decisions.

I enjoyed this post. In my own life, I’ve realized that I need to spend a little more each week by not obsessing over the grocery store circulars. I can spend an hour or more studying them and then making a list, e.g. Bread, butter, and apples at Acme; chicken and bananas at Shop Rite; Asparagus and peanut butter at Giant. And on paper it always comes out cheaper. But the reality is too often I’ll go into each store and decide for instance that the strawberries looked great at Acme, and the hamburger was a great buy at Shop Rite, etc. and then I end up spending much more.

So now I do my shopping in one weekly trip to a warehouse store (BJ’s or Costco) and then once a month I’ll fill in at a grocery store with items not available in bulk. By focusing my purchases on two stores only, I can keep the grocery bill very steady.

I totally agree about grocery shopping! At a certain point, my time is worth more than the money I might be saving by going to multiple stores! Its easier to just go one place and buy what is at a good price!

Reading your story makes me grateful that as long as I can remember my bank wanted a minimum balance to waive the monthly fees, so I always use that plus $100 as my safety margin, before transferring money into savings. Otherwise, I might be doing the $0 balance thing too.

I also have a good system now of waiting until I know what my next credit card bill will be, and have my second paycheque for the month. Then I can calculate amount in account, less credit card bill, less minimum balance, less reoccurring bill at first of month, less $100 extra, and then transfer that amount into savings. The credit card allows me to do my spending a little bit ahead of my paying, so I don’t have to guesstimate what I’m spending for the month, and move money to savings before I spend it.

This is another reason to use Mint, since having the money is separate accounts becomes less “painful” since you always have your total cash on hand and Net Worth visible on the main page.

Also, this is why I would advocate using a credit card for as many purchases as possible, then paying it off and the end of each month. I only have my mortgage and car payment coming out of checking, everything else (even bills like water, cable, cell phone, etc.) goes on the credit card so I always have enough money in checking when the bill comes due. Haven’t worried about overdrafting since my first paycheck out of college.

I totally agree that putting purchases on a credit card and paying it off frequently can be a great way to avoid overdraft fees.

I set my budget at the beginning of each month and include my fixed expenses as well as budget for variable expenses such as groceries, utilities, etc. I put all of my expenses on a rewards credit card to rack up the points and I pay it off about once a week. This way I can see what I have spent of my budget, how much I have left, etc. I am also racking up rewards at the same time.

This was a great story and was a lot more interesting than some of the others.

I do this, too, though my credit card only accumulates points on whatever the balance is when the statement closes at the end of the month (which I think is pretty common). But I’ve never carried a balance on that card, and I average about $400 in gift cards per year in rewards.

Yes, Mint (for the most part) has been a wonderful additional to my personal finance tools! We used to use Quicken, but we’d go through lengthy periods where neither of us wanted to update it and re-categorize and make sure it balanced. By that time, we’d often forget what many purchases were for, esp. all the withdrawn cash. When we switched to Mint, all was beautiful again. We’ve had it for over a year, and it’s so easy for both of us to go in and check it every few days, categorize the oddball purchase, and monitor our checkings/savings/credit card balances to make sure our cash flow is working well.

I also liked this post a lot; I like that Kristin made mistakes, recognized them, learned from them, and shared what she learned (and is still near the beginning of her GRS journey). Sometimes the quest for “savings” makes us penny-wise but pound-foolish. One needs the big picture of how one’s habits and needs fit into the stricture of a “savings deal” before knowing whether it will actually save money. Do what works for you.

I liked and identified with this article. I’ve never actually overdrawn my account, but there have been times when payday is a couple days away and I have $20 in there. I end up using credit cards for those few days and then paying them off with my next paycheck. Even though I don’t pay any interest when that happens, it probably would be better for me to keep more cash in checking. (I do have a decent emergency fund, but it’s with ING, and the money takes a few days to transfer to my checking account.)

Ah, the downside of being too optimistic with your automated savings. I’ve been on and off of paycheck to paycheck living because of big savings goals and completely understand the completely superfluous induced stress. It feels great to watch all of that money flow out to fun things like Roth IRAs, the emergency fund account and student loan repayments, but ultimately it is way better to not need the calculator to see if that recent aggressive debt repayment combined with all of those persistent automatic withdrawals is going to push you below empty.

I have all of my automatic deposits on a weekly schedule for dollar cost averaging on the investment side of things. I find it’s easier to have everything go at once rather than to work out a complicated rhythm (that’s what credit cards, rent and student loans are for!)

I don’t really want to drop the weekly deposits, but I’m definitely open to suggestions on how to run this relentless system without pulling out the calculator each week and seeing how far I can push myself before my next paycheck. Obviously, I might have reign in some of that saving and maybe even move a bit of my buffer savings into my checking account (which would involve sparring with some mental barriers) and I suppose that’s one of the suggestions in the article.

Ramit Sethi advocates automation, including arranging all of your bills so they’re due at the same time. Not sure how well that will work if you’re really paycheque-to-paycheque, but perhaps you want to look into it? Details in his book “I Will Teach You to Be Rich”, or briefly described here: http://www.themogulmom.com/2010/09/ramit-sethi-money-automation/

I actually prefer making my credit card payment manually. I don’t have a budget, so it’s the one time of the month where I look at my spending and make sure everything’s in order, I’m not eating out too much, buying stupid things, etc. I just have a calendar reminder to do this on the 1st of every month (all my other bills are automated, since their amount is constant.)

I’ve been struggling with this a lot too. For me, instead of pushing it with my checking account, I run my credit card up a little bit past what I can afford to pay off. If I do that too many months in a row it gets very stressful and then I end up pulling money from savings to pay down the credit card. I’ve almost balanced it out again to where I’m not using my credit card and paying it down but it’s been tough because there’s not been a lot of fun money for me. I think I’ll have it paid off in a couple of paychecks though!

I treat my credit card like a debit card as well. As soon as I make a purchase with my credit card (POINTS!!) I transfer the money from my checking account to the credit card. I am a bit OCD and I review my accounts every morning so I have transfers occurring almost daily.

I save a large (35%) chunk of my pay check, but I also control the other aspects of my finances. I think it is important to take control of your finances. Taking control means being aware of the consequences of what you do.

I have a terrible time balancing how much to save. I get squeezed at the end of the month, but at the same time I’m afraid I’m not saving enough. It’s very challenging, and great to hear from others in the same boat.

This was a great post! I struggle with saving too much as well.
I have a set amount that I automatically transfer into savings twice a month (once after each paycheck). Some months I’m left with less than $100 in my checking account for food and gas after my monthly bills are paid. This has to last me two weeks. My savings and checking accounts are all at the same bank, so transferring money back and forth is easy, but I have to force myself to transfer money from savings if I’m close to overdrawing.
I really like the phrase “saving beyond your means”. I’ve never thought about it that way before but that’s exactly what I’ve been doing. I kind of figured that “doing without” is what adults have to do if they want to save money when they don’t earn much income.

I don’t think the author was saving too much, it’s just that she wasn’t very smart about it in her greed over getting interest.

Also, rewards checking allows you to spend from your highest yield account and not worry about low balances. However, it requires people to always spend with frugality and not the idea that you can afford it, so why not buy it, in mind.

I don’t think it’s mind over math. In fact the problem is NOT doing the math that allows you to save the maximum amount without overdrafts or fees.

Kristen just needed to calculate just three very easy numbers to stop worrying about money.

1. The amount of money that the bank requires to be in an account so that fees are not charged.

2. How much money Kristen would spend in a month where she spent a bit more money than average. Pick December. Be realistic and generous.

3. Add numbers 1 and 2. This is the maximum amount of money in the checking account.

Whenever money comes in and the amount exceeds amount 3, send the remainder off to savings. Note that is is never your goal to spend amount 2 dollars each month and amount 2 should be still less than your salary each month.

I’ve been guilty of the same thing but it was worse when I was deep in debt. I kept thinking, “this month I will absolutely stick to this budget” and I wasn’t even trying to save money, just break even. Oh what a “tangled web we weave…” but the only one I was deceiving was myself. I was not facing my spending habits or the actual bills I had each month. Wheww!! It took some doing to get this through my thick head, but finally the light came on.

Well saving money can be more difficult than most people think. I’ve been trying for years without outstanding results, until I came across this website barterquest.com. You can barter off your unused stuff or your vacation home, and you can get whatever you want in return. It’s a really cool concept.

I love this post. I have the same issue with obsessing about my savings and net worth. I love seeing that big number in my savings account. However, I’ve found that as I diversified this wasn’t really possible any longer (so disappointing). That was why I was so thrilled when I switched to Mint.com to track my accounts. It gives me a real-time total of all of my cash in hand as well as my credit debt (I use my rewards card for everyday purchases then pay it off each month) and my total net worth of all my assets. It’s a great alternative to keeping everything in one place, since I can diversify and still see that big number.

It seriously took that long to figure out the need to keep spare money in the checking account? If anything, you want to have access to money in an emergency. How much higher would the interest on the savings account be to offset even one overdraft fee?

I’m not a psychiatrist but the extreme need to maintain a balance perfectly at zero sounds a little obsessive.

Agreed, especially when some PF experts (Dave Ramsey, Mr. Money Mustache) exhort people to put every spare dime towards debt, even if it means slashing your discretionary budget to zero. I don’t see anyone (except maybe J.D.) saying it’s o.k. to have a life while you’re paying down debt and building up savings.

(By “have a life,” obviously I don’t mean spending $1500/month on dancing and drinking. I mean being able to go to eat once a week with a date or cover the occasional little expenses that come up that trade off your money for a little extra time/effort, like driving and paying for parking when time is short instead of waiting an hour for the bus.)

Nail on the head with the Dave Ramsey thing (and the obsessive thing). The thing is, I used Ramsey’s mentality when I was paying off my debt, and it proved to be incredibly helpful. All of my money was used for debt and I had almost nothing left over. It was fine for a while, and it worked, so I kept the same mentality when I started saving. The problem was, getting rid of debt, for me, was like going on a crash diet…and crash diets don’t last in the long run. With my savings goals, I had to make a lifestyle adjustment.

I used to use Quicken (I now use Mint) and I had a category titled, “Miscellaneous: Irresponsibility.” Library fines were a common culprit, and that’s an example of wasting money by trying to save money.

I do incur the occasional expense in my pursuit of miles and points, but in general, I play the game well and get back way more than I spend!

I really enjoyed this post and I hope we get to see more from this writer. I can definitely relate to the all or nothing thinking. At one point I joked with a friend that if I were homeless for only three months I’d be out of debt…

LOL – I can’t help thinking that if I were single and childless again and could live out of my office, I could save a year’s mortgage/rent money and pay off my debts and get that emergency fund going at last… I actually daydream scenarios of how I would do this.

Grass is always greener, right? I sometimes think how easy it would be to save more if I had a spouse and we both worked. I’m secretly envious of dual income couples who can live on one income and save the other.

No matter what our marital or parental status, we all just do the best we can :)

I still do this! Not with overdrafting on my account per se, but with retirement savings. I have plenty of consumer debt and very little savings, but I still put away 1/3 of my income into retirement, because I keep saying to myself I can’t afford to not have money when I retire. I know all the financial pundits say to get out of debt and build your emergency fund before saving for retirement, but I figure that would take forever and I risk losing a lot of future compounding if I forgo retirement saving now. I will say there have been times when I’ve wanted to cash out the Roth to pay the debt off, but I never do, and probably never will

Ugh! I hate when that happens! I got charged a $2 interest fee when I accidentally typed the wrong amount in my bill pay. Off by a penny, I called and got the fee waived. Both the lady on the phone and I had a chuckle about it. Just wish I’d been more on top of it in the first place. I hate wasting time / being on hold.

Great post! Although I read this blog frequently, I sometimes shake my head at the utter frugality of some. People should always remember that you really can’t take it with you. It’s very important to enjoy life and sometimes that requires a little cash. As a nurse, I’ve seen first hand that life is short. I know that I can’t do everything I want right now but I’m also not putting off the things on my to do list for that magical day of retirement that I might be too sick or broke (or dead) to enjoy!

Having money in your chequing account to avoid fees does feel a little like having it “held for ransom”, but at the amount it saves is always greater than what it would make in savings interest anyway. …So, I guess it’s worth it. (And at least having that chunk sitting there will hopefully also act like a buffer to prevent anyone from hitting overdraft levels.)

I find myself in this same boat. I do all the math with my spreadsheet and I see how far away a certain savings goal still is and try to push it to get there faster. In the end, I am arriving a bit faster to my goal but in the mean time I’m stressed constantly and worried about every penny I spend. I really want to say I’ll back off, but when I’m only 1 paycheck away from the goal at this rate I just can’t mentally justify not putting the extra away. The only problem with that is you are always “almost there” its just that as soon as one goal is finished there is another following right behind it.

I don’t really have this problem but for me, I need to have at least $2,500 in my checking account. Since my husband has direct deposit, his checks are deposited into the checking account and all of mine are deposited into the savings account. Whenever there is too much in the checking, I transfer it over to the high-yield savings account.

For me, I am too nervous to even stay too close to the $2500 because even though I am always paying attention to the bills and what is being paid when, I still worry that something will happen and then I’ll get charged a fee if I dip below the $2,500 mark. At the same time, I cannot wait to move money over to the savings. Because of this, I usually check my bank accounts daily.

Been there, done that! One of the irresponsible expenditures I allow myself is the small loss of interest big having a serious buffer on my checking account. I now have 3 months of living costs on my checking account and once a month I move money to the savings account or back. It costs me around 10 euros per month in interest but it saves me a lot of stress and worrying. My main goal in saving is to become free, so I do not want to be a slave from my checking account. Great article!

I really liked this post – it completely resonated with me.
I had a similar compulsion…
You should always pay off your credit cards in full right?
Except that if you dont’ have the money to do so, you end up putting more on thecard at the end of the month. the worst part about it is that it’s hard to see how much over you really are, until it’s too late.
I kept trying to pay down my credit card debt ‘as fast as possible’ but by constantly shorting my checking account – I risked overdraft gees (got a few and was able to have them waived), and didn’t have firm grasp of how much was really going in and out.
Like the author I had a strict budget of ‘the neccesseties’ but was completely unable to keep to it – feeling like a failure every month

I loved this article!! I remember a time when I too was saving every penny possible, and then one day, just snapped…went and got myself something, then something else, then somehthing else and in the span of a weke, ahd spent my whole paycheck. Granted, it wasn’t more than a few hundred, but that was a huge wakeup call, and I realized, that sometimes, when we are TOO tight with what we have, it can lead to over indulging, sort of like being on a strict diet, I guess.

Loved it!! I struggle with this same issue as well, and it’s great knowing that I’m not alone. Between the author and the other commenters, it’s great to know that others know exactly what this is like – and to read some success stories as well. Inspiring, enjoyable, and one of my favourite posts!!

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‘audition review’:

I love this article – I find it to be very well written, and feel that it shares personal information (thoughts, motivations, reactions) at just the right level. The pacing was great – enough time devoted to sharing/explaining, without ever crossing that line to the “OK, enough already, get on with it” point. Never, during this article!

I knew it was an audition piece from the intro, but otherwise, I don’t think I would have had any idea – it fits so well with the ‘feel’ of GRS. I hope that we get to see many more articles from this writer!!

The title of this post is misleading. It is not saving money that cost you money. Rather, it is not keeping track of your bank balance and allowing it to go negative. That’s just foolish. If there is a morale to this story it is the importance of tracking your bank balances to avoid very expensive overdraft fees.

The problem with Mint is that most people do not enter their transactions into the program, instead using Mint to get information from their bank. Outstanding checks and charges don’t show up until they clear. Therefore, you don’t know at any time how much is really in your account. This can result in overdrafts. I’ve been using Quicken since the mid 1980s. I record every check, every credit card charge, every deposit, and reconcile monthly. I always know what is in my account, and have not incurred a late charge or bounced a check in 30 years. I am shocked that so many poor people throw away hundreds of dollars in bounced check and late charges (and outrageous interest on their credit cards) by not keeping track. This is just foolishness. It is not the result of saving too much money.

I feel a better title for this article would be “How I discovered my own lack of common sense”. It definitely did not teach me anything new or change my perception of personal finance. Granted, judging by some of the other comments here maybe quite a few people need a wake up call – come on people, pay attention to your account balances. It’s really not that hard; set up an alert to be texted to you if you must.

I feel a better title for this article would be “How I discovered my own lack of common sense”. It definitely did not teach me anything new or change my perception of personal finance. Granted, judging by some of the other comments here maybe quite a few people need a wake up call – come on people, pay attention to your account balances. It’s really not that hard; set up an alert to be texted to you if you must.

Hey, Matt. You’re totally right about this being a common sense thing! But my point was that although I did have that common sense, my obsessive desire to scrimp and save was overshadowing it. Even when I set up alerts, used Mint–took all of those logical steps–I had to change my perceptions more than my financial planning. Emotion was drowning out logic. What you’re talking about is, yes, not that hard. But for a lot of people, overcoming an obsession is a bit more difficult.

I love this article. This is a problem I really struggle with – I have a tendency to fritter (a coffee out, a snack, a book, cinema trip…).I spend money on lots of little things, none of which is necessarily bad but all of which add up to too much money. I have tried to stop myself by reducing the available cash -I limit my monthly current account allowance and lock the rest away (not lock permanently, but in accounts that punish you for withdrawals for example by bonus interest rates if there are no withdrawals). But I like my little nonsensical purchases, I get stressed I spend Â£50 more than I plan in a month, I lose my interest bonus. It isn’t big amounts of money, I don’ have debt but this really bugs me. I can’t save the way I want to because of little bad habits.

I love this article. This writer has been by far the best audition writer. Saving beyond my means is a bad habit of mine. It’s a delicate balancing act between watching the reserves balance go up versus the stress of managing a razor thin margin of error on the checking account. Of course, I don’t ever receive overdraft fees on my checking account. With a little miscalculation, I’m always on the cusp of getting one, though.

Absolutely connected with this article. I like the way the author stated their own experience here and that of her parents too. I too have had to reassess how I save and what the price of stress is worth. Hire this contributor, she simplified an seemingly simple subject, that obviously effects many others so even I know I’m not the only one in this boat of realization.

The fear of overdrafting is an unncessary stress that we place upon ourselves.

I’ve read nearly all of the comments on this post and not one person mentioned anything about overdraft protection – it takes two minutes to set up this feature. Most banks offer this service of linking your checking account to another account(typically savings) so that any overages on the checking account will be taken out of savings thus bypassing any fees associated with an overdrawn account. At best, you avoid fees. At worst, you spend your own money.

There are also buffers that we can set up for ourselves. Deposit/leave a minimal amount in your checking account that is comfortable to you – say, $100-$500 and make that your new ZERO. Never dip below this buffer zone, but it’s there if you need it(just like it’s in savings, but I can’t help how you feel about your money). This way, if something pulls you below your new zero, you can choose to add back the difference to make it “zero” again or include that buffer into your budget and expect to spend your buffer each month, year, whatever.

Anywho, this is one of my favorite audition posts. Her content is relatable and I enjoy the injection of real-life experiences that we’ve all probably gone through at one point or another. It’d be great to get someone on here that is a work in progress from earlier steps in the game.

I know I’m late to the party, but I just read this post and I loved it! Made such good points and so well written. Loved the writing style and it really hit home for me. “What is peace of mind worth?” Is a really important question that I struggle with too and needs to be worked out. Just had to comment because I was so impressed. Would love to see more from her!!

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My name is J.D. Roth. I started Get Rich Slowly in 2006 to document my personal journey as I dug out of debt. Then I shared while I learned to save and invest. Twelve years later, I've managed to reach early retirement! I'm here to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you get rich slowly. Read more.

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